The Digital Non-Economy

A blog about business and economics.
May 27 2012 8:08 AM

The Digital Non-Economy

Great piece from Ross Douthat on how the social impact of the internet far exceeds its actual commercial possibilities:

It’s telling, in this regard, that the companies most often cited as digital-era successes, Apple and Amazon, both have business models that are firmly rooted in the production and delivery of nonvirtual goods. Apple’s core competency is building better and more beautiful appliances; Amazon’s is delivering everything from appliances to DVDs to diapers more swiftly and cheaply to your door. [...]
The German philosopher Josef Pieper wrote a book in 1952 entitled “Leisure: The Basis of Culture.” Pieper would no doubt be underwhelmed by the kind of culture that flourishes online, but leisure is clearly the basis of the Internet. From the lowbrow to the highbrow, LOLcats to Wikipedia, vast amounts of Internet content are created by people with no expectation of remuneration. The “new economy,” in this sense, isn’t always even a commercial economy at all. Instead, as Slate’s Matthew Yglesias has suggested, it’s a kind of hobbyist’s paradise, one that’s subsidized by surpluses from the old economy it was supposed to gradually replace.

I'm less sure about Amazon, but what really makes Apple the great internet age commercial success story is that it sells complements to the virtual goods available on the Internet. The iPad is a lovely piece of software engineering and industrial design, but if the web sucked it would be a much less useful product. Fortunately for all of us, the web doesn't suck—it's full of ways to amuse, entertain, or inform yourself.

Note also that the internet's not unique in this regards by any means, it's just much bigger. To the best of my knowledge, nobody's ever gotten rich my inventing a card game. And even though casinos do make money hosting poker tournaments and there are such things as professional bridge players, quantitatively speaking those are marginal actiivities and the vast majority of games are friendly or low-stakes pursuits undertaken with no expectation of meaningful financial reward.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.